The Tenant's Rights Towards a New Landlord in Greece
The Transfer of Ownership of a Tenanted Property is Not Rare
Especially, if the purchased property serves as a residence, the new landlord usually aims for his own occupancy of the property rather than its tenancy. This is the reason why the change of the landlord constitutes the greatest concern of the tenant. Immediately after purchasing the property, the new owner usually pursues the eviction of the tenant for personal occupancy. However, the Greek legislator has provided for the protection of the tenant, specifying the conditions of his residence in the property, even after the change of the owner.
Transfer of Ownership of the Tenanted Property by Contract (e.g. Sale, Donation etc.)
Before proceeding I should clarify that in Greek legislation the condition under which the owner of a property, tangible or intangible, gives the right of its use to another person in return of a regular payment is described with one single term. In other words, there is only one word in Greek legislation for the terms “lease”, “tenancy” and “rental”. For the avoidance of any misunderstanding in the following lines I will use the term “tenancy”.
According to Article 614 CC (Civil Code), if during a tenancy, that is proven by a document of certified date, the owner transfers the ownership of the property to a third party or grants another right in rem that precludes the tenant, the new owner assumes the rights and obligations of the tenancy, unless it was otherwise stated in the tenancy agreement. If the right in rem that the landlord gave to the third party does not preclude the tenant, the third party has an obligation not to interfere.
That is, if the sale of the property to a new owner takes place during the tenancy, the obligations and rights of the new owner of the property do not change, if two conditions are met:
a) The tenancy is proven with a written agreement of certified date. A document acquires a certified date in certain ways, which are defined in Article 446 CC. In particular, the private document acquires a certified date as to the third parties only when it is validated by a notary or another public official, competent under the law, or when one of those who signed it is deceased or when the essential content thereof is reported in a public document or when another event occurs that similarly renders the date certified. The validation is done by noting onto the document the word “validated” and the date.
Formerly the tenancy agreement document acquired a certified date with the submission and the handwritten validation of a copy thereof by the competent Public Revenue Service. Now this validation is done through electronic registration of the tenancy agreement on TAXIS (the website of the Greek General Secretariat of Information Systems, a subsection of the Greek Ministry of Finance) and the printing of the relevant certifying document.
b) Nothing different has been agreed with the tenancy agreement. That is, a term has not been included in the tenancy agreement, which would provide for example, that in case of sale of the property during the tenancy, the withdrawal of the tenant from the property must take place within three months after it is requested by the new owner.
At this point, it must be considered what applies if one of the two above conditions is absent, i.e. the tenancy is not proved by a document of certified date or there is an opposing term in the tenancy agreement.
Under Article 615 CC, if a) the tenancy of a property is not proved by a document of certified date or b) the tenancy agreement contains the condition that, in case of disposal of the tenanted property or concession of a right in rem, which excludes the use of the tenant, the new owner will have the right to expel the tenant, () the new owner may terminate the tenancy prior to one month if the tenancy has a duration of up to one year and prior to two months, if it has a duration longer than one year. If the new owner terminates the tenancy, the rights of the tenant against the landlord for compensation are maintained intact.
The registration of the tenancy agreement on the TAXIS website provides it with a certified date. Also, an oral tenancy agreement does not entail the protection of the tenant, if its data is not registered on the TAXIS website and the rights of the tenant without a written contract are limited. However, a written tenancy agreement, which states reduced (false) rent relative to the agreed, may bear a certified date, regardless of such irregularity thereof.
In this case the new owner has the right to terminate the tenancy. The results of the termination, if the tenancy duration was agreed up to one year, shall occur one month after the termination notice was served to the tenant and two months, if the tenancy duration was agreed for longer.
Transfer of Ownership of the Tenanted Property by Auction
The change in ownership of a property can also be done through auction.
According to Article 1009 of the Civil Procedure Code (CPC), as amended by Law no. 4335/2015, if the property auctioned was tenanted for the exercise of business therein, the successful tenderer (the new landlord) has the right to terminate the tenancy; therefore, such tenancy is terminated after two (2) months from the serving of the termination notice. In this case, the summary of the award report is law enforced against the tenant and the sub-tenant as well against anyone who draws his rights by them or holds the tenanted property for them.
The reason that the Greek legislator distinguishes between commercial and municipal tenancies, is the protection of the successful tenderer (i.e. the purchaser of the property through an auction) from the entrepreneur, who proceeds to a virtual renting of his owned property to another company of the same interests for a long time, when he is in danger of seizure, with the ultimate goal of being able to exploit it even after its sale by auction. With the new regulation, the new owner, regardless of the existence of a written tenancy agreement with a certified date and of any prior agreement between the tenant and the previous owner, will be able to terminate the tenancy and after two months from the service of the termination notice he shall be able to expel the tenant from the property.
Property Rental Following its Seizure
The aforementioned include cases where the property was tenanted and then seized, i.e. the tenancy came before the seizure. However, the case is different when the property was tenanted after its seizure, i.e. the seizure came before the tenancy.
Article 997 par. 1 sec. b of the CCP states that after the seizure of the property, the tenancy (of the property) by the debtor or the third owner or the possessor or the granting of the use or possession (of the property) thereof under another legal relationship may be terminated by the successful bidder within one (1) month from the transcription of the summary report of the award (= within one month from the transcription of the summary report of the award, which is the new ownership title of the buyer, in the Land Registry or Cadastre under the new owner). The tenancy or other legal relationship is terminated after two (2) months from the serving of the termination notice to the tenant and then the law may be enforced according to the Article 1005 paragraph 2 CCP. Furthermore, the right of the termination of the tenancy in accordance with Article 615 CC, discussed above, is not affected and the summary report of the award is law enforced against the tenant after the deadlines of this article are exceeded, which begin after the summary has been served to the tenant.
When a property is purchased by public compulsory auction, after the awarding of the property to the successful tenderer (the buyer, who made the highest bid), an award report is compiled by the notary. The summary of that award report constitutes the ownership title of the successful tenderer which is transcribed in the Land Registry and/or the Cadastral Office. Within a period of one month from the transcription of the summary of the award report, the successful tenderer may serve a termination notice to the tenant and, in that case, the tenancy shall be terminated two months after the service.
Article 997 CCP does not distinguish between a tenancy proven by document of certified date or not. Therefore, it shall apply in both cases, i.e. even if the tenancy was drawn up with a document of certified date.
At the same time however, it is defined in Article 997 CCP that the tenderer has the right to terminate the tenancy in accordance with Article 615 CC.
That is, if the property was firstly seized and then was tenanted and at the same time the tenancy cannot be proved with a document of certified date, the new owner may terminate the tenancy either in accordance with Article 997 CCP, or in accordance with the 615 CC, as discussed above.
Advance Payment of Rents by the Tenant to the Old Owner - Landlord
It is interesting at this point to see what happens, if the tenant has paid the landlord a number of rents in advance, that cover a period even after the transfer of the property ownership. In practice it is regularly found that a long-term tenancy is compiled with a notarial document, which is transcribed in the Land Registry and the rents have been paid in advance by the tenant to the landlord for the whole duration of the tenancy.
However, in accordance with Article 616 CC, rent prepayments, which were made to the landlord who divested or rent concessions which were made by him, as well as the rent seizures made by the lenders thereof, are powerless against the new owner for rents of over three months, beginning since he (the new owner) informed the tenant about the divestment.
Namely, rents which were paid in advance by the tenant to the previous owner of the property shall not bind the new owner to request them again from the tenant. The tenant is obliged to pay the rents to the new owner after three months, from the time when the new owner notifies the tenant about the transfer of the property.
Possibly however, a bona fide tenant could challenge the new owner with the complaint of improper exercise of right, in accordance with Article 281 of the Civil Code, if he knew, when purchasing the property, that it was leased for many years with prepaid rent, since the lease was made with a notarized document transcribed in the Land Registry, i.e. it was publicised to the third parties.
Our law firm has extensive experience in leasing and auction issues. Do not hesitate to consult us about your case.